Austin Energy Annual Report

AUSTIN ENERGY ANNUAL REPORT FISCAL YEAR 2019 CONTENTS Mission, Vision, Brand Promise // 3 Austin Energy Governance // 4 Message from the General Manager // 5 The Big Picture // 6 Outreach and Education Means Affordability // 8 Public Power Consistently Delivers // 10 Make the Connection // 14 CUSTOMER DRIVEN. COMMUNITY FOCUSED.

As a public-power utility, Austin Energy has the responsibility to build a better Austin for our community and our customers. Customer Driven and Community Focused is our promise to those we serve. It means that in our mission, vision and daily operations, we put them first.

MISSION: VISION: To safely deliver clean, affordable, reliable To drive customer value in energy services with electricity and excellent customer service. innovative technology and environmental leadership. AUSTIN ENERGY GOVERNANCE

Austin Energy is a public-power utility and a department of the City of Austin. This establishes the Austin City Council as the governing body for Austin Energy, providing oversight and policy direction for the utility. Austin’s City Manager and Austin Energy’s General Manager are responsible for the safe and effective operations of the utility. (Pictured here is the 2019 Council.) A MESSAGE FROM THE GENERAL MANAGER

Customer Driven. Community Focused. That is The electric industry is evolving, and the Austin Austin Energy’s promise to those we serve. That is area is one of the fastest growing areas in the the promise made by more than 1,700 dedicated nation. Austin Energy is constantly innovating and employees who work hard to safely deliver clean, modernizing our operations to meet those changing affordable, reliable energy and excellent customer needs. In FY 2019, we made significant progress in service. In FY 2019, as in other years, we made good that area by investing in more than 400 megawatts on that promise. of wind energy, engaging the public on the new Rainey Street Substation to enhance our downtown Austin Energy’s promise comes from our status as network and working to add more capacity to the a public-power utility, bringing more benefits to our District Cooling system. You can read on to find community. Specifically, one of those benefits is details on these projects and more. As we continue affordability. The Austin Energy team continues to to grow, Austin Energy is making sure we can meet focus its efforts on this benefit. Multifamily energy electricity needs now and into the future. efficiency efforts aimed to help renters throughout the city. There are the Customer Assistance Programs Austin Energy works to make sure we can meet and that continued to provide aid to those in need, and exceed the needs of those we serve. That is what there is the consistent support we provide to our local it means to be Customer Driven and Community school districts, investing in the future of our region. Focused. That is the benefit of public power. As you review this Annual Report, you will find our JACKIE A. SARGENT I am honored to serve as General Manager to such FY 2019 highlights in this area. It is important for our Austin Energy a great team. Together with our city and community, General Manager community to have the tools and knowledge to save we will continue our history of innovation and service energy and money. to build a better utility and a stronger Austin. Our affordability efforts are reflected in customers’ Sincerely, bills. The average Austin Energy residential customer comes in well below state averages for both energy use and monthly bills. Because Austin Energy is a public-power utility, we can offer these programs — Jackie A. Sargent and many others —to support affordability, helping make Austin a more livable city for everyone. THE BIG PICTURE

Austin Energy is making sure the local system is ready for the region’s growing population. The utility invested in improvement projects to support reliability, prevent outages and increase system capacity to account for the growth of the community. The region is growing, and Austin Energy is adapting to those changing needs. Reliability means customers have the power More than 11,054 customers joined they need when they need it. Austin Energy Austin Energy in FY 2019. Since FY 2015, works 24/7 to keep the lights on and the 45,815 customers were added power flowing for Central Texas residents. to the system. Average interruptions a year 0.94 Energy Efficiency Results for FY 2019 Texas public power average 1.26 332.75 MW Remaining to Average length 1,200 MW Goal of outage (minutes) 71.51

Texas public power average 132.05

Renewable Energy as percent of load FY 2019

Wind 27.1%

Biomass 0.9% Energy Efficiency has long been a focus at Austin Energy. Between 1982 and 2006, these efforts saved approximately 700 MW of electricity. Since 2007 — with another Market 62.0% energy-saving goal set — Customer Energy Solutions programs continue to help Solar 10.1% customers stay informed on energy consumption, save money on utility bills and reduce emissions for a cleaner Austin. These efforts saved around 75 MW in FY 2019, putting As a public-power utility, we work to meet customer needs and expectations. Austin Austin Energy on track to meet its goal of 1,200 MW. Energy continues to invest in renewable energy for our customers and community. THE BIG PICTURE

AUDITED INCOME STATEMENT AUDITED COMPARATIVE STATEMENT OF NET POSITION

Fiscal Year Ended $ In Millions Sept. 30, 2019 Sept. 30, 2018 $ In Millions Sept. 30, 2019 Sept. 30, 2018 Change

Operating Revenues $952 $946 Cash 407 454 (47)

Power Supply Revenue 495 455 Accounts Receivable (net) 149 137 12

Power Supply Expense 469 455 Power Supply Under Recovery 21 – 21

Non-Fuel Expenses 684 667 Other Under Recoveries – 3 (3)

Depreciation Expense 204 166 Debt Service - ST 79 44 35

Operating Income/(Loss) 90 113 Contingency Reserve 106 97 9

Other Revenue (Expense) 23 54 Power Supply Stabilization Reserve 108 95 13

General Fund Transfer (110) (109) Capital Reserve 69 42 27

Net Income/(Loss) $3 $58 Nuclear Decommissioning Reserve 232 221 11

Debt Service Coverage 4.0 3.6 Other Restricted Assets 146 120 26

Debt to Capital Ratio 52% 44% Other Assets 1,290 922 368

Capital Assets 3,004 2,596 408

Total Assets 5,611 4,731 880

Current Liabilities 161 154 7 STANDARD AND POOR’S BOND RATING Power Supply Over Recovery – 35 (35) Other Over Recoveries 41 21 20

Revenue Bonds 2,014 1,275 739

Commercial Paper 27 213 (186) AA AA Other Long - Term Liabilities 1,459 1,128 331 Current Target Retained Earnings 1,909 1,905 4

Total Liabilities and Fund Equity 5,611 4,731 880 OUTREACH AND ENERGY EFFICIENCY MAKE AUSTIN ELECTRICITY MORE AFFORDABLE

For almost 125 years, Austin Energy has served the region with reliable power and an increased quality of life. The utility is committed to its community. The work done at Austin Energy is driven by customers and focused on the community. Making that connection means the utility can help Austin be more affordable for those it serves. MULTIFAMILY ENERGY AUSTIN ENERGY HELPS SUPPORTING SCHOOLS THE CUSTOMER EFFICIENCY HELPS CUSTOMERS USE LESS SUPPORTS THE FUTURE ASSISTANCE PROGRAMS TENANTS ACROSS AND SAVE MORE PROVIDES AID TO THOSE THE CITY IN NEED

With 88 percent of low-income Austin Energy finds ways to Supporting customers and Managed by Austin Energy, customers renting in the Austin give customers the knowledge the community also means the City of Austin Customer area, Austin Energy understands and power to change their supporting the education of Assistance Programs are how the importance of reaching use and bills. Those efforts are Central Texas’ next generation of they City helps residents in need that community. In the past 30 making a difference. According scientists and scholars. Austin- with their utilities. The Customer years, the multifamily program to the latest federal data (2018) area school districts received Assistance Discount Program — a has served more than 90,000 from the Energy Information $1.9 million in discounts piece of the Customer Assistance tenant units. In FY 2019, staff Administration, Austin Energy in FY 2019 and $55,652 in Programs — offers an average focused on enhancements and came in well below state averages rebates. This is how monthly discount of $76.66 new measures for the program, for comparable utilities in both Austin Energy invests in the to low-income customers served laying the foundation for an residential bill amounts and use — region’s future. by Austin Energy, Austin Water expanded vision and upgrades $94.77 and 885 kWh. These and the Watershed Protection 400 AISD teachers have that will further address figures mean Austin Energy Department. access to EVs in Schools affordability. has one of the lowest average residential bills in the state. curriculum, bringing EV awareness to students and faculty. PUBLIC POWER CONSISTENTLY DELIVERS WHAT CUSTOMERS NEED AND WANT

Customers expect reliable power 24/7 from their electric provider. For Austin Energy, this means operating and maintaining power plants, managing 5,688 MW in generation capacity, keeping up with more than 12,000 miles of electric line and providing retail electric service to more than 490,000 customers. It is a complicated operation to make sure customers have the power they need, but public power has the opportunity to deliver more. It can deliver reliability both locally and to the state-wide grid. It can adapt to the changing electric environment with innovation and insight. And it can invest in the energy future for the region. Public Power is able to deliver more value because it is shaped by the customers and community it serves. GENERATION PROTECTS CUSTOMERS FROM HIGH MARKET COSTS

AUSTIN ENERGY GENERATION RESOURCES ALL ACROSS TEXAS 1 Jumbo Road Wind 300 MW 2 Whirlwind Wind 60 MW 3 Hackberry Wind 165 MW 4 Karankawa Wind 206 MW 5 Whitetail Wind 92 MW 1 6 Gulf Wind 170 MW 2 7 Los Vientos 2 Wind 200 MW 8 Los Vientos 3 Wind 200 MW

3 9 Los Vientos 4 Wind 200 MW 11 Raymond Wind 200 MW

12 21 12 Aragorn Solar 180 MW 16 13 Roserock Solar 157 MW 13 15 14 14 Waymark Solar 178 MW 18 24 20 17 15 East Pecos Solar 118 MW 25 23 16 Upton Solar 157 MW 19 22 17 Webberville Solar 30 MW 18 East Blackland Solar 144 MW 4 19 Pandora Solar 250 MW 5 20 Mueller CHP 5 MW 6 8 21 Nacogdoches Biomass 100 MW 9 11 7 22 South Texas Nuclear 430 MW 23 FPP Coal 600 MW From Far West Texas to the Texas coast and from traditional to renewable energy, Austin 24 Decker Creek Gas 927 MW Energy’s diverse generation investments make a difference all across the state. During tight 25 SHEC Gas 570 MW conditions on the Electric Reliability Council of Texas market in August 2019, high demand triggered two Level 1 Energy Emergency Alerts and a need for conservation. Austin Energy’s resources supported statewide reliability, and the utility worked with customers locally to reduce demand during those critical times. As a community-owned utility, Austin Energy’s operations and generation protects customers and the state as a whole. PROVIDING THE POWER TO GROW

AUSTIN ENERGY INVESTS IN THE ENERGY FUTURE In FY 2019, Austin Energy entered into a contract for 200 MW of wind power with RWE Renewables (formerly E.ON Climate & Renewables), and the Karankawa Wind Farm came online with 206 MW of capacity. Nacogdoches Generating Facility

Austin Energy is constantly looking for the best mix of generation resources to maintain its clean, affordable and reliable portfolio. Austin Energy purchased the Nacogdoches Generating Facility — a wood waste, biomass fueled power plant in East Texas — in April 2019 to save customers $275 million over time, when compared to the previous contract. Since the purchase of the plant, Austin Energy’s bond rating with Fitch Ratings improved to AA. The purchase was awarded Deal of the Year — Southwest from The Bond Buyer, a trade In 2019 District Cooling Plant #3 (DCP3), located in the Seaholm eco-district, moved into a second year of construction. Crews completed much of the concrete shell for both buildings and the underground piping necessary to add 10,000 tons of capacity publication that covers the municipal to the downtown cooling loop. DCP3 will be completed in 2020. bond industry. PROVIDING THE POWER TO GROW

The Repowering Downtown initiative wrapped up community engagement in 2019 around building a third substation to serve the downtown network. This substation is located in the historic Rainey Street neighborhood, and the community chose the design of the surrounding wall and property landscaping, and selected Rainey Street Substation as the name. Upon completion, the Rainey Street Substation will allow Austin Energy to rebuild the more than 40-year-old Brackenridge Substation, providing the growing downtown network with reliable, resilient energy into the future. Construction of the substation will begin in 2021. MAKE THE CONNECTION WITH AUSTIN ENERGY

For Austin Energy, the commitment to being Customer Driven and Community Focused ultimately means making the connection with customers. This is how the utility can provide the safe, affordable and reliable power our community depends on while also meeting their needs beyond electric service. The benefit of public power is that we are there for our customers and the community.

HOW TO CONNECT WITH US NEWSLETTER Austin Utilities Now editions are mailed and available electronically in English and Spanish at austinenergy.com/go/utilitynews. ONLINE austinenergy.com

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